The Road to Wealth

Why are we a rich nation? It’s tempting to suggest our wealth is a result of bountiful natural resources. However, if bountiful resources were the source of wealth, South America and Africa would be rich instead of being mired in poverty. Hong Kong, Japan and England, natural resources-poor nations, would be poor instead of rich. Development experts and foreign-aid hustlers would have us believe that past colonialism accounts for Third World poverty. That explanation ignores the fact that United States, Canada, Australia, New Zealand and Hong Kong have a colonial history and are rich while Nepal, Tibet, Liberia and Ethiopia were never colonies and are among the world’s poorest nations.

Mankind’s history is mostly one of grinding poverty. Poverty is no mystery. People are poor because they can’t produce things highly valued by their fellow man. The real mystery is how did a tiny portion of mankind’s population, for only a tiny part of his history, manage to escape poverty. We don’t have all the answers but there are some useful clues.

When we see wealthy nations, what else do we see? One tendency is greater personal liberty that includes greater protection and respect for both the person and his property. The people are free to engage in peaceable voluntary exchange to a much greater extent than their poorer counterparts. There is rule of law and government plays a more limited role in the economy. As a result, these tendencies not only make for higher moral standards, they produce an important side benefit – greater wealth.

Pick up Freedom House’s or Amnesty International’s survey of world human rights protections. Then turn to country rankings of per capita income in the World Almanac. Arrange countries according to human rights protections, per capita income and whether their system tends more towards free markets or extensive government control. A remarkable correlation emerges. Hong Kong, Switzerland, U.S., Canada and Germany, having greater economic liberty, are at the top. Romania, Somalia, Hungary, Syria, Brazil, Zaire and many others, with highly restricted liberty are at the bottom.

The good news is that following the collapse of the Soviet Empire many more people have a greater measure of liberty. Nonetheless, at least 25 percent of the human race continues to live under brutal authoritarian regimes and unthinkable poverty. That’s the standard human condition. Little is older than the notion that some people know what’s best and they’ve been ordained to forcibly impose that “wisdom” on others. It’s a notion accounting for most human misery.

It’s a notion in vogue with America’s liberal elite. They differ only in degree, but not in kind, from global tyrants who show little reluctance to forcibly impose their will on others. If you think I’m wrong, consider what would happen to anyone who declared that he is an emancipated adult and fully capable of tending to his own retirement needs. Further, he disavowed any Social Security benefit or any other government handout in his retirement years. Plus, he resolutely refused to make “contributions” into Social Security. Depending on his level of resoluteness, he could suffer fines, property confiscation, imprisonment or death at the hands of our government.

There’s no complete answer to why some nations are rich and others poor. But you can bet the rent money that a large part of the answer has to do with personal liberty and private property rights. Even if liberty and private property rights had nothing to do with wealth accumulation, we want it anyway because it’s morally superior to authoritarianism.

Walter Williams

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Born in Philadelphia in 1936, Walter E. Williams holds a bachelor's degree in economics from California State University (1965) and a master's degree (1967) and doctorate (1972) in economics from the University of California at Los Angeles. Please contact your local newspaper editor if you want to read the WALTER WILLIAMS column in your hometown paper.